Central banks must be able to maintain the effectiveness of monetary policies, in order to keep legal currencies from being challenged by private currencies, said He Dong, deputy director of the Monetary and Capital Market Department at the International Monetary Fund (IMF), Yicai.com reported.
Private currencies such as Bitcoin and other virtual currencies were created after the financial crisis, when some people were dissatisfied with central banks’ crisis management and monetary policies, thus they believed there should be a private-run currency, He said.
So far, most people still regard virtual currencies as investment assets or even speculative assets, which is considered as a store of value. However, most virtual currencies have not yet functioned as a unit of account. Thus, virtual currencies are still incomplete in terms of economic properties.
Monetary policy-makers should actively respond to the drastic changes in the economic structure, He said. Science and technology finance, as well as the sharing economy have brought new demands on the currency pattern, such as the need for cross-border micro-payment.
Therefore, central banks in various countries should actively face these challenges, including whether their national currency should be digitized.